4.5 - Laffer Curve Flashcards
1
Q
Which relationship does the Laffer Curve demonstrate?
A
Total Tax Revenue Collected
Tax Rate
2
Q
What does the Laffer Curve suggest?
A
There is an optimal tax rate
Maximises total revenue collection
3
Q
Why will the highest tax rate not necessarily be the optimal rate?
A
Labour market disincentives
Avoidance incentives
Brain drain potential
